Donna Kline's interview with Leader CEO Michael McKibben

The fight goes on. Click here to read Leader's Federal Circuit Opening Brief and click here to read Donna Kline's blog that includes an eyewitness report from the Federal Circuit Appeal Hearing, including the Facebook appeals attorney's apology to his client.

Friday, August 26, 2011

4. Facebook’s trial conduct

Opinion: One blogger's perspective

Leader won all verdicts where the playing field was even

Facebook slipped in changes to the "on sale bar" jury instructions that misstated the law and confused the jury

On the claims in Leader Technologies, Inc. v. Facebook, Inc., 08-cv-862 (D.Del. 2008) where the playing field was even, Leader won the verdicts, namely that Facebook "literally infringes" 11 of 11 Leader patent claims and that no published prior art exists. See Leader v. Facebook Jury Ballot.

On the claim of invalidity for "on sale bar and public disclosure" Facebook prevailed on the jury verdict which said that Leader had offered the invention in a commercial offer for sale more than twelve months before the priority date. USC 102(b). However, the playing field was not even, and the facts do not support this claim.

Facebook added the early commercial activity claim just three months before trial, after the close of all discovery; the new judge had only been on the job a few weeks

Just three months before trial, after the close of discovery, Facebook added their 35 U.S.C. 102(b) early commercial activity claim into the case, over Leader's objection of prejudice. Leader Opening Appeal Brief, p. 9.

Leader had no opportunity to prepare defenses

This meant that Leader had no opportunity to prepare its defenses with things like additional discovery, expert witnesses, testimony from the alleged recipients of the offers, source code, engineering records, and programmer testimony.

Leader has stated publicly that the programmer notations in its source code prove that Facebook is wrong. See Leader Press Release. Tellingly, Facebook knew this since it had petitioned the trial court six months earlier for access to Leader's source code. So presumably, if Facebook had found that Leader's source code supported their 102(b) claim, they would have paraded it before the jury. They did not. See Appeal Brief, p. 19.

However, since discovery had closed and the trial evidence had already been submitted to the court, Leader had no procedural chance to submit its source code into evidence in order to defeat this claim.

No testimony from the alleged recipients of the offers; no expert testimony analyzing the alleged offers; the no-reliance clause in the Leader non-disclosure agreements discredits Facebook's on sale bar claim

The docket shows that Facebook did not conduct a single deposition with any of the alleged recipients of the early commercial offers, namely The Limited, Boston Scientific, Wright Patterson Air Force Base. See Leader v. Facebook docket.

Leader's non-disclosure agreements contained a special provision called a "no-reliance" or "no legal effect" clause that specifically prevents preliminary discussions from being construed as offers. The Uniform Commercial Code ("UCC") recognizes such agreements between parties. See Restatement (Second) of Contracts, §21 (agreement not be be legally bound); See also Leader Renewed Motion for Judgment as a Matter of Law, p. 17, fn. 5; Leader JMOL Reply Brief, p. 7.

Facebook added convoluted jury instructions about secrecy and non-disclosure agreements that the court approved

To confuse this legal matter even further, Facebook proposed and the trial court approved a number of changes to the model jury instructions for patent cases. Leader objected to all these departures from the norm. Facebook made convoluted changes discussing secrecy and non-disclosure agreements when the model instructions make no mention of non-disclosure agreements and secrecy. See Uniform Jury Instructions for Patent Cases, United States District Court for the District of Delaware, 4.5 ON SALE STATUTORY BAR (PDF pp. 60-61).

Facebook's changes to the model jury instructions included two references to secrecy and non-disclosure agreements, namely:

  1. "However, it is irrelevant whether or not the offer for sale was secret or non-secret;" and
  2. "An offer to sell can invalidate a patent even if the offer was secret, such as under the protection of a non-disclosure agreement." Final Jury Instruction No. 4.7, ON SALE BAR, pp., 41-42.
These changes confused the jury to a chilling effect when considering that the "protection of a [Leader] non-disclosure agreement" in its no-reliance clause specifically negates the possibility of an offer for sale.

The jury can be forgiven for not knowing these intricacies in patent and contract law. Unfortunately many judges and attorneys have an inadequate grasp of the UCC, and an even fewer know about the the Restatement (Second) Contracts and its "no legal effect" provision. This trial appears to have suffered dramatically from this ignorance. See MBIA Ins. Corp. v. Royal Indem. Co. at 210 (Unambiguous written agreements should be enforced according to their terms, especially between sophisticated parties).

A reasonable person can see that Facebook knew the no-reliance clause destroyed their on sale bar argument, so they set out to neutralize its legal effect with more "dark arts" to confuse the jury, and the law on the subject.

The bottom legal line is simple: The no-reliance clause  in Leader's non-disclosure agreements kills Facebook's on sale bar claim, as a matter of law.

Facebook's expert proffered bad science

In an evident attempt to perfect a trifecta of jury confusion, Facebook's invalidity expert Dr. Saul Greenberg offered erroneous science regarding Leader's provisional patent disclosure. In order for Facebook to put its early commercial activity claim in play, it first had to knock out Leader's earlier provisional patent priority date of Dec. 11, 2002. Therefore, Facebook needed to prove that the invention disclosure in the provisional patent application was somehow deficient. Dr. Greenberg claimed that the provisional disclosure did not anywhere disclose the presence of a "tracking component." The prima facie evidence disproves Dr. Greenberg's testimony, but worse, he used bad science to prove his point.

Dr. Greenberg's methods violated the principle of bivalence by asserting that two diametrically opposed truths were both true. This bad science formed the basis of his testimony. Therefore, as a matter of law, his testimony must be dismissed. His testimony  had a chilling effect on the jury's assessment of the facts, and was the only testimony at trial that the provisional patent did not disclose the tracking component. Leader's expert witness Dr. James Herbsleb showed multiple instances of the tracking component.

For a fuller analysis of Dr. Greenberg's expert testimony, go to another entry in this blog series titled "Expert witness practices "dark arts."

In lieu of hard evidence. . .

Facebook goal was to concoct a trial story that inventor Michael McKibben admitted in an "inventor's admission" that the Leader2Leader brand has always contained the invention. He did not, as the record shows.

Fig. 1: Rube Goldberg gadget to sharpen a pencil.
Linked from:
Click here to enlarge.
Rube Goldberg would be proud

Rube Goldberg's cartoons are famous for depicting convoluted gadgets. See Rube Golberg gadgets.

Facebook's Rube Goldberg gadget for Leader v. Facebook included the following components. We have written on these elements in previous posts, so they will only be summarized and cited here.

Elements of Facebook's fabricated trial story are: (1) No infringement, Leader v. Facebook Jury Ballot, Mark Zuckerberg used Leader white paper to build Facebook; (2) Misdirection, Missing Documents; (3) Sandbagging, Facebook’s "court room theater;"; (4) Fabrication, No evidence? No problem. Fabricate it.; (5) Innuendo, Facebook's "I'm tired" tactic; Patent Office records disprove Facebook; (6) Unreliable science, Expert witness practices "dark arts;" (7) Confuse the law, Patent Office records disprove Facebook, Facebook's "I'm tired" tactic, No evidence? No problem. Fabricate it., and Facebook's trial conduct.

The trial court erred in allowing Facebook's new claim so close to trial

Trial courts are not permitted to allow new claims to be added to a case if adding those new claims prejudices or surprises the party against whom they are asserted, are likely to disrupt the trial, the prejudice cannot be cured before the trial starts, and other factors. See Meyers v. Pennypack; Federal Rules of Civil Procedure 37(c)(1) ("If a party fails to provide information . . . as required by Rule 26(a) or 26(e), the party is not allowed to use that information . . .  to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.").

Facebook's amended claim after the close of written discovery and depositions, prevented any possibility for Leader to introduce its source code, engineer testimony, testimony of the parties alleged to have received the offers, and prepare an expert report to defend against the claim. Leader objected.

Facebook plied more "dark arts," and the court did not stop it. "Judicial discretion" is usually the reason appeals courts do not overturn such trial court decisions, but perhaps this case should be an exception.

Attorney Rules of Professional Conduct

Attorneys are called upon to zealously represent their clients within the bounds of the law, but are not called upon to breach their ethical duties to achieve them. See American Bar Association, Model Rules of Professional Conduct.
  1. Respect: “A lawyer should demonstrate respect for the legal system and for those who serve it, including judges, other lawyers and public officials.” Id., Preamble [5].

  2. Improvement: “As a public citizen, a lawyer should seek improvement of the law, access to the legal system, the administration of justice and the quality of service rendered by the legal profession.” Id., Preamble [6].

  3. Confidence: “a lawyer should further the public's understanding of and confidence in the rule of law and the justice system because legal institutions in a constitutional democracy depend on popular participation and support to maintain their authority.” Id.

  4. Public Interest: “The profession has a responsibility to assure that its regulations are conceived in the public interest and not in furtherance of parochial or self-interested concerns of the bar.” Id., Preamble [12].
Paraphrasing Leader's argument about the efficacy of the "clear and convincing" evidence standard of invalidity,[1]
if the Rules of Professional Conduct are to be anything more than an empty semantic exercise, a serious review of conduct in this case may be called for.

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[1] "If requiring clear and convincing evidence of invalidity is to be 'more than an empty semantic exercise,' it must mean that the jury's verdict here cannot stand. Addington v. Texas, 441 U.S. 418, 425 (l979) (quotations and citation omitted)." Leader Opening Appeal Brief, p. 37-38.

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